After a long wait,
the change in Petroleum Ministry chair has brought a good news
to celebrate for ethanol manufacturers in India. It is
said that the center would shortly issue a notification making
ethanol blending mandatory from October 2006.
The new norms would apply to both public sector as well as
private sector players. Initially a 5% blend would be allowed
and implemented successfully & this would be increased to 10%
by October 2007.

We believe, only
resolution would not solve the objective, but a close micro-level
monitoring & closing of all escape routes for not blending
ethanol by oil corporations should be checked. A tax incentive
to the program at this stage would definitely “make the oil corporations
blend ethanol out of goodwill”.

Secondly it is seen
that price disputes between ethanol suppliers and oil corporations
remain the core problem area. Meetings are being conducted between
ISMA (Indian Sugar Mill Association) and Ethanol Manufacturers
Association officials to derive certain formula for price fixing.
As current prices of ethanol offered by oil corporations is Rs.
18.75 is very less as the process of Special Denaturant Spirit
(94.68% alcohol) is fetching a price around Rs. 21.00 to 21.50
(May 2006) itself. Hence the sugar factories are more happy to
sell 94.68 % alcohol (SDS) than to convert it to ethanol and sell
it at a lower price.

The ethanol manufacturers
should come out with a parameter and memorandum to establish and
assure an uninterrupted supply (lot work to do).

At the current situation
the Northern part of India has stated blending not in full fledged.
But Maharashtra, Goa, Gujarat & the southern states of Andhra
Pradesh, Tamil Nadu are yet to restart full fledge. Only one manufacturer
XL Telecom ltd (Ethanol Division) has courageously come forward
to supply at the rate of Rs. 18.75.

On the other hand
India has a lot potential for flexible fuel vehicles.
As it is shows that by 2010 it is estimated that India will
have 36 times more cars than it did in 1990. (Watch out
China! USA?).

While some news has
emerged of Indian companies in Private sector to develop ethanol
in large scale plants from non-molasses routes in rural parts
of India.

Reliance Industries
Limited is planning to set up an ethanol extraction plant at Kurkumbh.
Farmers should celebrate as then can afford to give a sound
rate to their sugarcane. The ethanol manufacturers should
not worry as ethanol they proposed to produce will be consumed
for their mono-ethylene glycol unit itself & will not be using
for petrol blending.

(Get in touch
with Business Brains for exact statistics of future demand
and supply.)

To conclude , it’s
bright future for ethanol & the black period is over. Only
request to the government is to be fixed with the resolution of
making ethanol mandatory & monitor the successful running of the
ethanol programme.